Economic Woes Continue

The Cabinet devoted its second session in two days to the worsening economic crisis as labor unrest spread to government departments, including the Foreign Ministry, and a year-end survey of prices exposed the ravages of triple-digit inflation on workers.

The Cabinet convened in regular weekly session yesterday after meeting in special session last Friday to discuss the economic program proposed by Finance Minister Yigal Cohen-Orgod. Drastic budget cuts topped the agenda. But while all ministers agreed the) are urgently needed, each ministry seems determined to limit the extent of its own sacrifice.

Concern was expressed that Cohen-Orgad would. not be able to implement his program to its fullest. “extent. Some economists argued that the Finance Minister’s own “declaration of economic principles” which he presented to the Cabinet Friday would, in fact, lead to an even larger budget because the government must honor its index-linked bonds.

Cohen-Orgad himself agreed to lower his sights. He proposed a $600 million budget cut instead of the originally planned $1 billion slash. Bank of Israel Governor Moshe Mandelbaum, who attended Friday’s emergency session, warned that $600 million was indeed the absolute minimum. The state of the economy needed much more drastic cuts in government expenditures, he said.

CABINET SHOWS LITTLE FLEXIBILITY

But so far the Cabinet has demonstrated little flexibility. It is stymied by the conflicting demands of the various coalition partners which give the Likud government its narrow parliamentary majority.

It is also faced with the need to make some dents in the hitherto sacrosanct defense budget. Defense Minister Moshe Arens argued vigorously at both Cabinet meetings that the proposed cuts would create an unacceptable security hazard by limiting the purchase of modem tanks and combat aircraft.

Deputy Premier David Levy, who is also Minister of Housing; and Construction, insisted that the budget must provide special assistance to the low income sections of the populace.

Similar pressures were exerted by Tami which represents the generally impoverished Sephardic community; the National Religious Party which holds the Education portfolio and refuses to accept the proposed abolition of free high school education; the Aguda Israel whose yeshivas are heavily subsidized by the government; and the ultra-nationalist Tehiya which has threatened to quit the coalition if there is any freeze on settlement building in the occupied territories, regardless of the economic drain they represent.

Cohen-Orgod warned his colleagues that if the proposed cuts are not swiftly implemented, a foreign currency crisis will be unavoidable in the coming year.

WORK STOPPAGES AND SANCTIONS

Meanwhile, employees of the Foreign Ministry, served notice that they will institute sanctions beginning today and, unless staff demands are met, will escalate them to the point where the ministry and embassies and diplomatic missions abroad will be forced to close down by the middle of this month. (See related story.)

The Foreign Ministry staff consists of civil service employees. They have longstanding demands for equalization of their salaries to the levels prevailing at defense-related departments which do similar work, including Mossad, the intelligence organization.

They want official recognition by the Treasury and the Civil Service Commission of the “special status” of Foreign Ministry work which includes long, irregular hours, hazards involved in overseas service and the special skills, such as knowledge of a foreign language, required of many Foreign Ministry employees.

Staff Committee chairman Yoav Behiri said Premier Yitzhak Shamir and David Kimche, Director General of the Foreign Ministry, “sympathize in principle” with staff demands. But they have failed to gain sympathetic understanding and recognition from the Treasury and Civil-Service Commission.

Behiri said the ministry staff is fully aware of the economic, crisis and does not demand wage increases immediately., only-recognition of their “special status” and a timetable to implement that recognition in practical terms — meaning raises — within one year.

The wave of civil service sanctions has already resulted in work slowdowns and stoppages at the Communications Ministry, Interior Ministry, Welfare Ministry, the Treasury and the income tax department. The Energy Ministry is contending with demands by Electric corporation workers for prerequisites which Energy Minister Yitzhak Modal considers “overly generous. ” Last week he fired the chairman of the corporation’s board, David Hagoel. Electric power has not been affected as yet.